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In pursuit of prosperity

Vijay Joshi’s book takes a long view of the Indian economy since the 1991 reforms

Published: 14th October 2016 12:55 PM  |   Last Updated: 15th October 2016 01:00 PM   |  A+A-

Express News Service

This is a companion volume, if that’s the word to use. Vijay Joshi and T N Ninan decided to write a book together and since their writing styles were different, they later decided to write two separate books.  Ninan’s The Turn of the Tortoise was published earlier and Vijay Joshi’s volume follows. The 13 Chapters in this volume are classified under five heads —‘Setting the Stage’, ‘The Growth Challenge’, ‘Stability and Inclusion’, ‘Political Economy’ and ‘The Future’.

Economist Vijay Joshi is a voice that deserves to be heard and read. Despite being based in Oxford, he is aware of what’s going on in India. Any book on India and its economy tends to take stock of what has happened since 1991. Joshi’s book is no different and those are elements covered under the first four heads. The fifth head is more contemporary (such as taking stock of what has happened since May 2014). There are also two specific ideas: one on inflation-targeting and the second on providing a basic income. On the broad template of ‘reforms’, there is nothing to disagree with.

Having said this, I have three problems with it. First, it is too macro and ignores the ‘federal’ structure of the Constitution. For instance, depending on the year, 90-95 per cent of national income originates in states and most factor market reforms Vijay Joshi advocates are domain of states under the Seventh Schedule. Land and health are entirely state subjects. Take the discussion of the Industrial Disputes Act (IDA). While I agree with the thrust, there is no mention of IDA changes introduced by states. (The index has a howler. It refers to Industrial Disputes Act on p.247. But that IDA on p.247 is International Development Association.) Second, assuming a basic income transfer is accepted, who is this to be given to? There is a reference to below the poverty line (BPL). But that BPL number is on the basis of NSS, a survey. It doesn’t identify specific households. That requires a Census, such as SECC. SECC has been accepted by Union and states for identification of beneficiaries, based on deprivation criteria. But there is no mention of SECC in the entire volume.

Third, despite being clued in on what is taking place, there are gaps. Consider the evaluation of the Modi government on improving the investment climate. Since last year, there has been an ease of doing business exercise by DIPP. As with SECC, there is no mention of this.  Instead, the discussion centres on World Bank’s doing business rankings. For those who don’t know, the latter is only based on surveys in Mumbai and Delhi. That lack of information also affects the PSE discussion, or that on Centre-sponsored schemes and abolition of the Plan versus non-Plan distinction. Both will dramatically alter composition of public expenditure schemes. In fairness, the manuscript was probably completed some time ago and handed over to the publisher. That’s the problem with a book like this. If it is a long view of the Indian economy, many things take time to change. But if it is a short view of what the government has done since 2014, statements become outdated fast.

Perhaps reflective of my biases, in evaluating what has been done since May 2014, I would have liked the following to be included—reforms in budgetary processes, scrapping of old Union-level statutes, changes in the ‘planning’ process, financial inclusion in the sense of opening new bank accounts, pension and insurance payments through these accounts, MUDRA Bank, the Swachh Bharat Abhiyan, reports of the three sub-groups of CMs, the My Gov platform, Smart Cities, PAHAL, PRAGATI, the e-platform for agricultural marketing, dispute resolution for PPPs and emphasis on personal capital. This is not a mere listing of government schemes. Each is relevant for the broad template Vijay Joshi has in mind. But don’t get me wrong. It’s a wonderful book to read.

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